I'm 75 and along with my wife we bought our first house back in 1971. We have bought several since then and we also have properties we rent out. We lived through the mega high interest rates of the 1980/90's and saw many people in trouble due to overstretching themselves when buying a property as interest rates went into double digits. It's important to consider what will happen in the future if such a scenario happens as is currently the case. One thing to remember though, if you buy a house and sell it many years later but do not make a lot of profit on the deal, at least you have lived in it "rent free" for all that time. I am definitely on team buy it!

I am in my mid 20s now and working hard to save up for a mortgage deposit. Nischa you are absolutely on point there about the psychological factor to consider. For me personally, since I moved to the UK a decade ago by myself, renting is a vital and nerve-wrecking process for me as I don't have that safety net of moving back with my parents (which I think lots of people don't either due to location, family relationships etc), so personally buying is the only ticket out of the rent-find-a-house-move cycle, which is a bit of a nightmare on its own.

The fact that you discussed opportunity cost tells me you are truly an accountant! Love it

As a property owner in the US, it's way too expensive to buy in the current market. Will be closely watching to see if this changes in 2023.

As a 32 year old mom and step mom of 6 who has made every life mistake under the sun, the biggest and most important life lesson I’ve learned is that whatever stage you’re in, make sure your habits and choices align with your goals. For instance, I went to college in a small town where home prices were already cheap, but then the housing crisis happened. Then the houses were dirt cheap. I came to a very cheap college with enough money saved that could have been used for a down payment as a first time homebuyer. Instead I just blew through all my money like an idiot. That continued to be a theme in my life until quite recently when I was finally forced through life experiences to stick to a strict budget. Later on even, my husband and I look back and kick ourselves for not buying a house with a basement, living in the basement and renting out the main part of the house. It would have covered our mortgage and made it possible to have more dispensable income and travel like we actually wanted to. Now we’re having to start over due to an awful housing market and many other factors.

I lucked out when I bought a 4 bedroom house when prices were low after the 2009 housing crash and that has worked out great for me. I've been renting out rooms which covers my mortgage and taxes. I also pretty much do all of the maintenance and repairs myself. I essentially have free housing plus significant increase in equity and value of the home. When you rent out you can also deduct a large amount from your income and expenses like depreciation and cost of supplies and improvements etc. at least here in the US.

A buyer should not forget about the costs of sale. This can typically ad another 8 to 10 percent in costs upon sale of the property. Buying today would most likely create a loss over a 5 year hold vs renting. If you held for 10 years or longer, you would probably be better of buying.

Really great video! Really well summarised and the numbers were articulated well! Another thing to consider as well with the buying scenario. Of that £1,780 a month, because interest rates are so high, the interest portion of that monthly payment is £1,350 for the first 5 years which is dead money and principle is around £400. This is due to the amortisation schedule. So when you compare that the dead money you’ll be paying from renting £1,560 and mortgage dead money £1,350 + maintenance to fix anything that breaks, people say renting is throwing money down the drain, renting actually is throwing less money down the drain now. Only difference is the dead money goes to a bank instead of a landlord. Issue is when something breaks, the bank won’t pay to fix it.

I purchased my home eight years ago during a 'peak' in Australia. In that eight years it hasn't gained a cent in value. It dipped then now only worth what I paid for it at the start of this year. I am fortunate that I have put a decent dent in the mortgage and have equity in it now.

Went through the whole series of your "Accountant Explains" and the work that you've put in, is impeccable @Nischa! Great scripts, brief knowledge, beautiful presentation and gold standard narration of the different topics! Keep us posted with this life skill, the knowledge of finance!

Just found your channel. Love the clarity and simplicity of your presentations. Subscribed. Great job!

It's a disgrace that somewhere to live and have a life and security is now a trivial commodity. In an ideal world, everyone should be able to own their own home.

The one single reason i bought was for security, meaning i can make it a home knowing someone cannot kick me out with a month notice and also i can keep the property in a good state of repair where as my landlords in the past have done minimal work on the property's.

Hi! I just wanted to take a minute and thank you for your awesome videos. It's not just about teaching basic accounting skills-it's about giving people a better understanding of their finances and helping them develop good habits that will stick with them for the rest of their lives. Unfortunately, these lessons aren't being taught in schools today. That's why there is a need to make sure that people are given the tools they need to build wealth and prosperity for themselves and future generations. These things are so simple, but with some self-discipline and the right mentorship, they could be taught to so many people. Unfortunately, due to lack of this knowledge in today's fast-fashion, instinctive buying and use-and-throw world around 90% of the younger generation will end up being part of the lower wealth gap.

Another option is live with your parents 😂

Hi Nischa 👋, love your explanations. To the point. I find one thing missing in all the analysis is the part where you miss out on settling on a good locality. If you buy a house today 10 km from the city centre, the city is likely to grow and that suburb in 5 years would become a mini city in itself - see Delhi NCR for example, or even Bangalore or Mumbai. But if one rents all the time, then at the time of buying at later point in life, the person will have to settle 25 km from the city centre because the city has grown and affordable places are outside, making it harder to commute if needed. This is something I miss in almost all analysis videos. Thanks!

This video is all over the place, its very very simple, in major cities where rents are high buy as soon as you can and in the best (LOCATION) for good capital appreciation, if you cant buy property just yet invest in either S&P 500 or Vanguard 500, in the long term property will out perform investments in these funds but its better to invest rather then leave the money in the bank. Outside of major cities you can rent as no point in buying in these locations as they have very low capital apprecation, so it all depends on LOCATION. You must do your own homework and see what locations are in demand by both buyers and renters and near good infrastructure ie transport, schools, amenities.

Great video, so on point!!! What may be an idea for another video is buying to use property vs. buying to rent out. In Germany for example we have really nice tax benefits for renting, basically almost all of the costs of buying, renovation (if any), maintenance, and mortgage interests are tax deductible. Not sure if that is the same elsewhere, but on top of the rental income that can be really nice bonus.

How have I only just discovered this channel? I’ll check out all the vids, but so far so good 😊

Regarding the value increase of a property - that is of theoretical value if you live in the property as you cannot use the value increase (unless the bank recognises the value increase and lets you use it as collateral against another loan). So I would generally refer to a house that you live in not as an investment, but as consumption choice (just like rent). Regarding the opportunity cost of not being able to invest the money that goes into e.g. maintenance and interest payments: this is very valid but only applies if the person renting is disciplined enough to actually make the investments. Lastly, owning a property where no landlord can just terminate the lease is a very reassuring feeling which cannot be measured in money but for me outweighs some of the correct rational arguments.

I admire the way Nischa outlines out this information, so amazing, even got me into re-evaluating my life financially and i,m from far from Europe. Nicely done Nischa

Great video, also worth considering that house prices can, and indeed will at some point, in some shape or form, go down. Your house price graph only goes back to 2008 but look a bit further to the 90's and you'll see big drops. Consider also the amount of government intervention since 2008 (help to buy, low interest rates etc.) that has fuelled the house price increase bonanza. You're right to compare rent v buy in the context of 1% increases or 3% increases, but folk should also consider those numbers in reverse when making a decision. Christian Noone also mentioned a great point worth repeating: when comparing rent v buy, factor in mortgage interest repayment which is a huge amount of dead money (although long term you obviously end up owning an asset).

Real estate does not not actually appreciate in value because the currency used to purchase the property loses value over time. This can make commodities seem like they are gaining value.

Thanks Nischa. Such a crisp and clear presentation is well appreciated... After not-so mathmatical analysis, I did purchase last year prior to giant rate hikes, but wondering how the selling cost should be included in the calculation... can be almost 7% in the US.

After a mortgage is paid off, the only costs are utilities, tax and repairs, which can hopefully be paid on a pension. Whereas renters must pay an ever-increasing rent into retirement, which may eventually exceed their pension, leaving them homeless. This is a fear for me personally, as a renter.

Hi Nischa! I came across your channel on Saturday and have literally binge watched ALLL your videos! This is exactly the sort of channel I was praying for… I have two questions: 1) with the new law regarding no longer getting tax relief on mortgage, I.e. paying tax on the total income rather than on what you keep after all expenses (what it was previously). Does it still make sense to rent out when it might mean being out of pocket each month? 2) can you do a more detailed video on making a passive income from digital assets and also explain affiliate marketing a bit more…and what are the first steps for someone in a 9-5 corporate job to start this…

I really like your video. You make it very clear and it's very well explained. Thank you for effort and time. I have beeN FOLLOWING YOU for a while and your videos keeps getting better and better.

People underestimate how rare is to find a couple who are both good in finance and investing. Rare. Very rare.

You're a fantastic auditor, and think this is a great way of explaining the pros or cons. I would say 1% for house maintenance is optimistic when you factor in life spans of boilers, general wear and tear, as well as people's need to freshen the appearance of their interiors over time.

Very well presented. Clear, punchy and concise, another great video Nischa

I’m in the other boat I think renting is better. There are so many phantom costs with owning a home and it’s the only asset in the world where you are taxed three times! when you purchase, when you own and when you sell. Not only that but often the interest you pay (money for nothing) is almost half the price of the property. A renter could live 15 years off that. I think if you rent but also invest into shares you will have faster growth and less responsibilities. I like the freedom to move when I want, where I want, closer to work if I need. I’ve never had a landlord kick me out. We have a lot of made to rent luxury properties here so I guess I’m lucky. But what if you buy a home and have a nightmare neighbour??? You’re stuck!

very informative video... thank you. also the buy vs rent calculator is really spot on.. cheers for this

One thing I've noticed or I "think" anyway is, a lot of my friends that invest in property love to talk about the potential ROI 5-10yrs from the time they've purchased the property but rarely include maintenance costs in their evaluation. I think the best combination is having equity in the property but hoping that either cash flow (from rent) or the increase in the property value will cancel out inflation & maintenance costs, and the other will be the net profit. If the numbers are really crunched thoroughly, a lot of homeowners that live in their homes don't make as much net profit when it's time to sell as they give off unless they happen to be in a booming market. I find that those who strictly buy properties to turn a profit tend to really go over the numbers in depth.

Great video! Could consider an adjustable rate mortgage or refinance in a few years as more likely than not interest rates will decrease in the future likely making purchasing a home more favorable. Thanks for the videos.

Another great video Nischa!! It really hits on the key question with the economic environment the way it is to helping you understand truly if you can even afford to buy (factoring in all the hidden costs etc like repair and maintenance per year). I thought the calculator you showed was also a really useful tool!

I bought my first property at 19 (40 now), best decision I've ever made. I've heard all the arguments for renting, but none of them make any sense to me. My mortgage payments are only half the cost that renting my house would be each month. Yes, you normally need a 10% deposit (£20,000 on a £200,000 terraced house), but you're not really losing any opportunity to invest that because you ARE investing it in a property, which on average go up just as much as the S&P 500.

Very helpful, thank you. I look forward to learning more from you.

Hi, I am new here!I think the best is to act! So, there’s not the good time to buy a house, but all depends on your situation! If you are ready to buy your first home, and you have the right deposit, just buy it. On the long run, buying is better than renting.

This is the conversation I have with clients who ask the same question, US real estate system is very similar.

Times are tough but we have to keep going. I am 32. I hope to be primed to buy a house with my partner by early 2025, fingers crossed. Thank you for your video!

Main thing is to buy as early in life as possible. "As possible" being the key thing. Also, from experience you can pit mortgage brokers against each other. They look harder for a deal.

Great video and use of real life examples makes it very clear to a house buying newbie. I would add that whilst these costs are comparable on a year by year basis, the house buyer at some point (say after 25 years) will have paid off their mortgage, and from that point onwards all income they get from work is theirs to keep, whilst the renter would have to continue their rent payments indefinitely. This might seem irrelevant but in reality would make a huge difference to your saving/budgeting requirements today if you know that one day your future housing costs will be zero (ie I don’t need to save in my 20s-40s because I know I can do so once I’ve paid off my mortgage).

Depends in which country :) in Poland we have APR 10% for mortgage loans :) So it is obvious to rent if you pay 3000pln for and 5000pln for buying (prices needs to plummet drastically) and there is also own contribution, renovation costs :)

Hi Nischa, great video and love your content. Only constructive points I’d have on this one are around other psychological factors and costs. Watching the oscillation of your wealth in equity markets is emotionally challenging for the best of investors, often leading to poor decisions. With property you don’t have a valuation number that you can see changing. This is a key affecting factor for those assessing opportunity cost and likely outcomes. Investing also has costs which will be higher if you use a wealth mgmt service (2/3% annual for affluent segment) to help keep distance between you and your cash as it oscillates which would probably be best choice for most! Keep up the good work and push on other platforms ☺️ Ross

Hi Nischa. I have just listened few of your videos that allowed me to draw the picture of what you do, what you focus on and how you manage your time and finance. In one of the videos you talked about Universities. Which means you had to finish one of those. Do you mind me asking which generation in your family you are since moving to UK and what your parents and grandparents did in their professional lives?

Hey nischa great video weighing the pros and cons of buying or renting a home. Each area has its own advantages.. If we have money let us wait for the correction in market soon.. Then we buy. Great content.. Thanks nischa... .

Very nice video... recently I read an article about a topic which was about whether to invest a lump-sum in a collective investment scheme with a wrapper (such as ISA, bonds etc) or should you use the lump-sum to reduce the mortgage debt ... Surprisingly it is good to invest long term (at least 5-6 years) and the net return (after all the fees and charges been deducted) is higher in comparison to the value /equity gained should someone overpay and reduce the Mortgage debt down... Coming back to your topic, I really loved your video which is extremely specific, prudent and informative as well... excellent work and many thanks !!!!

Great content as usual.....More videos on property investments please...with your opinion on best areas in England to invest in 2023?

I can't believe people rent the same place for an average of five years in the UK! Renters I know in Denver sign 12 month leases and move about every 1-2 years until they can buy a home.

Nice video. House prices are currently falling and expected to fall resulting in a loss of equity if you were to buy now. Good comparison but maybe include the possibility of depreciation. Also, the government expects people to be unable to pay their mortgages hence they set up the mortgage bailout for those on UC in the autumn budget, not definitive but an indication that interest rates are likely to remain constant or increase further.

i liked what you said "The key point here is really depends on your situation and when do you think the right time to buy or to sell........"

I read a book that changed how i view money and the book is based on buying vs renting it makes a great argument to only rent because the money you use to buy the house you could use to start a business and invest in growth stocks, these combinations will outpace the growth of the house value and in tern you get to live in a house and pay no repair fees ect.

Excellent video. So clear and concise.

Nicely done Nischa, my takeaway from all this is that everyones financial circumstances are different and it really pays to run the numbers in depth before making a decision either way. I think generally although the rate of rise of the value of property may alter in the short term due to the market/ economy in the longer term the trend is always an increase in value.

Thank you Nischa for your work. ☺It would be nice to buy a property in UK but it seems to be not easy if you are non-resident.

Hi Nisccha, great video, thank you! In terms of investment opportunity costs, what are the alternatives to invest in, other than property and SNP/index funds?

Fantastic video, it was really helpful! Subbed

Good analysis for people to consider. My only comment would be to factor in the rent cost incurred as part of the opportunity cost of investing the deposit elsewhere. Not sure about the UK loans market but here in NZ a powerful strategy is using interest only loans which reduce our payments by around 25%, thereby increasing borrowing capability. In conjunction, using Interest Rate Averaging to manage the risk of rapid interest rate rises means you can ride through challenges of volatility in the economy and personal circumstances. What I used to was to do was determine what I thought I could pay off the principle from discretionary income over the course of a year. I would then have this amount on a floating rate and assuming circumstances allowed, hammer it with payments to reduce the principle. The balance of the loan amount I would split into five parts and fix them for one, two, three, four and five year terms. This meant that each year a only a portion of the loaned amount would come off fixed and only that amount would be exposed to the current interest rate. If rates had rocketed up my exposure and financial risk was much lower and I could assess if these conditions were likely to continue and if so have the time to adjust my financial situation to cope with them- eg sell property, etc. At this point after year one I would look at what was left floating, decide what I could pay off over the next year, float that amount, and fix the remainder of that loan on interest only for five years, repeating this exercise each year. If circumstances tightened I could reduce my discretionary principle payments to zero and just pay the interest, and when times were good go back to hammering the principle again. This strategy gave me maximum borrowing capacity and maximum control. Note that in a falling market the reverse happens, floating interest rates will be lower than what is fixed. However this is the averaging effect and the power of the strategy is resiliency. Note also that despite the inexperienced saying interest only loans are bad because the principle is not being reduced, there is nothing wrong with paying no principle as inflation is constantly improving your debt to equity ratio- do the numbers and see using the rule of 72 for example. As well for young people starting out, get flat mates in to help with the cashflow proposition with the bank and thereby be able to afford to get into a better neighbourhood / higher value property. Understand that the first house is not the one you actually want, but a stepping stone along the way to it. Start as soon as possible remembering that expression that compounding interest is the most powerful force in the universe- this is what inflation is doing with your property, and also understand the leveraging power of property- you can buy say GBP325k of property just with your GBP49k deposit, whereas you can only buy the GBP49k amount of shares with it. The asset value is what inflation acts on, not how much money you have in it.

Thanks for the detailed explanation, so much sense in the points you made

Hi Nischa, I came across your channel lately and I must say that I'm very happy with your content. I work in the Investment Banking Division too and I can absolutely relate with your videos. I signed up for your newsletter monthly, just a suggestion - how about we build a community where all like minded individuals like us can come across and help each other?

Great comparison, fantastic content, I would love it if you slowed the speed slightly, I only rented for 6 months, many years later have a very healthy nestegg

I love how you speak, right to the point. Greetings from South America

Buying is all very well if you’re in full time employment and can afford to even get a deposit together as a single person. Very difficult for most without rich parents or inheritance or extremely hard working people, which I have the utmost respect for as the sacrifices are huge for many. Being disabled, I’m unable to work as some days I’m in complete agony and cannot move from bed as I’m crippled with spasms and extreme tiredness, this can vary greatly from week to week or even hour by hour - so I have no option to rent. (Not a sob story) - I’m ok 👍🏼 I would like to thank you Nischa for you’re awesome videos, I guess it’s a good income for you however KZfaq generates revenue and how it’s worked out - but these videos seem very interesting and informative so a big thank you.

Your videos are insightful. Thanks for sharing. Housing market widely expected to fall next couple of years.

Buying is also the far better option in most parts of Canada as of now. However, in situations people have brought a house in the higher up on the housing market curve (past few months). Now the housing market is expected to cool down a bit in Canada, this will result in a net loss in the short term.

Financing a property is pretty stupid. Apparently everyone talks about equity on the home like is guaranteed. Yea lets drop this prices by raising interest now everyone is upside down on their loans massively. Good luck!

Love your KZfaq channel! Perfect voice for it 🤙

You are very well spoken and make complex scenario to a more simplified language to general public. It would be advisable for you to consider webiner sessions for your regular youtubers.

Renting you have zero security vs owning. In general renters have significantly less wealth than home owners. Renting is fine if you are investing elsewhere, but that would be an extremely low number, most renters are just living from pay week to pay week.

Definately agree on the oportunity cost. If you believe you can make money right now, grow your own business or invest your money with good returns, might be good to think twoce before buying. You gave another perspective which I totally forgot to mention in my video I jist created. Well done!

The opportunity cost you mentioned for comparison relies on borrowing to enable investment. Would have to be a brilliant investment to make this strategy worthwhile.

Very insightful!

My current wife and I, set home together 24 years ago. Giving up our separate homes, hers rented and mine mortgaged. We scrimped to purchase a property sufficiently large as to be able to accommodate us, the 5 off spring we have between us and our 2 dogs. 12 years later, when all of our children had ‘fled the nest’, we decided to downsize. We sold our property with sufficient profit to help our off-spring set themselves up leaving us with a small ‘nest egg’. We chose to move into a spacious apartment in a prestigious development in the heart of the UK’s 6th largest city. The monthly rent works out to be almost half of the cost of a mortgage on a similar apartment in the same development. Fr us, renting is the logical option. An excellent video by the way.

hi Nischa, love your content. One thing that people do is spend a lot on cosmetic stuff for the house when they buy and get bored but don't when they rent. over the years it mounts up.

If you live on your own 1700 is alot just for accommodation expenses after bills not much left

Such as useful video, thank you for the buying vs renting chart - Keep the videos coming!

If you can flat share with the right people, or live with your parents and save a LOT of your income for 10 years, you have a chance at getting a deposit for a small home/ flat with the right lender. It’s not always possible, but when it comes to where you live, buying is ALWAYS better than renting.

I have just come across your channel accidentally while looking at KZfaq monetisation, and also incidentally I am in the process of buying a property and this was just what I needed. I can't remember last time I subscribed so quickly😎

love your content!! can you make a video on employee VS business owner?

You can find a home that is not current lived in a upper class neighborhood that is around $2 to $10 million dollars full furnished and simple live in it for free! When the home owner find that out, you still get between 3-6 month of free rent after court proceedings begin to evict you. 😊

Thank you so much for your insight. One of the struggles I have is my job moves me every 2 to 3 years so I’m stuck renting. If you have any insight moving forward, please let me know. Right now I’m just saving money for a future house, when I will be in a location for more than three years.

This is a interesting topic - I was actually speaking to someone once who put an interesting slant on this whole house buying thing. I only have to go off what he told me and I have no idea if what he was telling me was legit. He basically told me that he sold the property that he lived in when he was 29 - but instead of buying another property he invested the money and has been living in rentals ever since, he was I think 57 when we spoke. He claims that his investments have now grown to a point where he can buy the property he wants cash, and still have a sizeable sum left over. His argument was that if he would have stayed on the property ladder, he may well now be mortgage free, but would not have had anywhere near the amount in his investments that he will have now, even after buying a property. It was an interesting take on things - I couldn’t help thinking though that this wasn’t much different from downsizing your house at 57, buying a smaller house and putting the remainder in the bank. He never disclosed numbers but did suggest that his investments were worth a sizeable amount…….

The UK is mad. How are people expected to find £65k upfront? Not everyone earns £90k

This is very informative. Thank you very much.

Thank you for all your advice!❤ Cand you share what camera and lens you are using? All the best to you!

From anecdotal experience, home owner > renter, just compare net worths; the difference is staggering

So glad I bought my home in 2020. With the inflation that followed, what I pay, that used to be a bit expensive (35-40% of my total income), now is already much more affordable (25% of my total income), plus I got a decent interest rate (1.9%, for a 100% house-value mortage). Now, when my relatives are talking about purchasing a home, and they say what they'd pay for a mortage, I always notice I wouldn't be able to afford for my home if I were to buy it today and should lower my standards for a smaller, badly isolated house that would cost even more in energy afterwards. For anyone having the intention to buy a home, I'd suggest to wait a few months, for the house prices to go down, and to take advantage of this waiting period to gather extra resources to put in on the purchase to both lower your monthly payments to the bank *and* to reduce your interest rate (further reducing the payments). Even though this is frustrating to pay a rent burning your money for nothing in exchange, you'll be glad when the house prices will drop by 15-25% in the next months and that your monthly payments went down by 30% because of that.

Very insightful balanced opinion, thank you... 🤞

Thank you so much for acknowledging opportunity costs! I may have missed it, but did you account for property taxes?

Another nice video makes me think about this daily thing in a new way. I hate the bank loan so much for a quite long time now as I think I have to give my hard earned money to the bank each month. But I totally forget the fact I will have the value of the property after I cleared all the loan. Thank you again.

Awesome video, thank you so much!

I agree with most, but I don't think stamp duty + solicitor fees + valuation = £16250. Assuming you are not a first time buyer (which makes stamp duty free) and not buying an additional property, the stamp duty is 5% x (325,000-250,000) = £3,250. Solicitor fees is

I love these videos! You’re so inspiring

Thank you

Game changer to buy a place with an income suite from a motivated seller. Great video !

Hi. Where did you buy that lamp in the background? I love it and want it.

5:49 I think that you are equating the down payment return and the property appreciation. Which I think is not right because down payment is like 10 % of property cost where as when the price of the property in creases then then it happens on the entire 100%. Which is very very different.

Great information will continue to follow you. Have been searching for another property please share your thoughts on Land its upside and downside found one trying to decide to purchase the price is Good.

One important factor is income. I had a look at a mortgage affordability calculator. For a single income at £53k with a 15% downpayment, the High End mortgage amount is £277k. So, for those that do not have the income but are able to save sufficiently for 15% downpayment, it is not wise to get a buy-to-let whilst still renting for yourself? This would still leave you with a property to live in after the mortgage is paid-off for the buy-to-let.

What do you think about renting where you cannot afford to buy and buy somewhere else? The issue in Australia is we cannot buy where we want to live